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Serving: IA
Planter in field
CUSTOM WORK: Performing custom work can be an additional source of income for farm operators.

ISU survey shows decline in custom rates

Overall rates are expected to decrease by 5.6% in 2018.

An overall decrease of 5.6% for custom work can be expected in 2018, according to a survey conducted by Iowa State University Extension. The 2018 Iowa Custom Rate Survey, available at the Ag Decision Maker site or the ISU Extension Store, was conducted by economist Alejandro Plastina.

“Even with an increase in the price of diesel fuel assumed, the majority of operations reported a rate decline,” Plastina says. “This is in response to tight margins continuing for farm operations across the state.”

While the cost of labor rose by 4.6% from a year ago, all other categories saw declines. The cost for harvesting and hauling grain dropped 9.4%, while preharvest operations, harvesting forages, and bin and machinery rental fell by more than 4%.

The survey received input from 124 farmers, custom operators and farm managers to determine estimated pricing for custom work. Custom rates are provided for tillage, planting, drilling, seeding, fertilizer application, harvesting, drying and hauling grain, harvesting forages, complete custom farming, labor, and bin and machine rental.

“We appreciate the respondents to the survey, as the information available in the Custom Rate Survey is only possible due to their responses provided each year,” Plastina says.

Custom rates vary by area
The reported rates are expected to be charged or paid in 2018, including fuel and labor. The average price for diesel fuel was assumed to be $2.95 per gallon. The values presented in the survey are intended only as a guide.

There are many reasons that the rate charged in a particular situation should be above or below the average, he notes. These include the timeliness with which operations are performed, quality and special features of the machine, operator skill, size and shape of fields, number of acres contracted, and the condition of the crop for harvesting.

The availability of custom operators in each area will also affect rates. Any custom rate should cover the cost of operating the farm machinery (fuel, repairs, depreciation, interest), as well as the operator’s labor.

The Ag Decision Maker website offers a Decision Tool to help custom operators and other farmers estimate their own costs for specific machinery operations.

Source: Iowa State University

TAGS: Management
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